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M/s. Indu Nissan Oxo Chemical Inds. Ltd. Versus Dy. CIT Central Circle-1 and ITO, Ward-1 (4) , Baroda

2015 (8) TMI 419 - ITAT AHMEDABAD

Addition u/s.68 - Held that:- As perused the letter of confirmation dated 26/03/2003 purportedly issued by Narendra Holding Pvt.Ltd. However, the said letter describes the payment through banking channel but has not mentioned the names of the 3rd parties in whose account such amount has been credited. Moreover, the assessee has also not placed any material on record suggesting that those payments were made to 3rd parties on account of calls in arrears and share premium as there is no mention of .....

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section 40A(2)(b) of the Act can be invoked in the event where assessee incurs any expenditure in respect of which payment has been paid or is to be made to any person referred to in clause (b) of section 40A(2) and the Assessing Officer is of the opinion that such expenditure is excessive or unreasonable having regard to the fair market value of the goods, services or facilities for which the payment is made or the legitimate needs of the business or profession of the assessee or the benefit de .....

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ny technical services to the assessee-company. The AO was of the opinion that mere holding of qualification does not lead to inference that he has indeed rendered any services. There is no dispute with regard to the fact that the issue in question is identical as was raised in the AY 1997-98.Therefore, taking a consistent view, we hereby direct the AO to delete the disallowance - Decided in favour of assessee.

Validity of the reopening of the assessment u/s.147 - Held that:- There is .....

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rt Corporation reported at (2014 (1) TMI 502 - GUJARAT HIGH COURT ) has decided this issue in favour of the Revenue.

Disallowance of employer’s contribution towards PF/ESIC - Held that:- . We find that the disallowance is made on the basis that the PF/ESIC contribution was not deposited even before the due date of payment but contention of the assessee is that the same was deposited before due date of filing of return. This fact is not controverted by the ld.DR and, therefore this gro .....

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been written off in accounts of the assessee. When bad debt occurs, the bad debt account is debited and the customer's account is credited, thus, closing the account of the customer. In the case of companies, the provision is deducted from sundry debtors. As stated above, the AO has not examined whether, in fact, the bad debt or part thereof is written off in the accounts of the assessee. This exercise has not been undertaken by the AO. Hence, the matter is remitted to the AO for de novo consid .....

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Income Tax(Appeals), Ahmedabad/Baroda ( CIT(A) in short) dated 22/09/2003 (CIT(A)-IV, Ahmedabad) for AY 2000-01, dated 05/01/2007 (CIT(A)-I, Baroda) for AY 2000-0 (reopening proceedings), dated 16/07/2012 (CIT(A)-V, Baroda) for AY 2006-07 respectively. These appeals were heard together and are being disposed of by this consolidated order for the sake of convenience. 2. First, we take up the Assessee s appeal in ITA No.4518/Ahd/2003 for AY 2000-01. The Assessee has raised the following grounds of .....

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ddition of ₹ 64,00,000 u/s.68 of the Income Tax Act, 1961, being receipt of call money from shareholders by rejecting the materials and evidences produced by the appellant necessary for the purpose. 3. The learned Commissioner of Income Tax (Appeals) erred in fact and in law in confirming the disallowance of payment of remuneration to Mr.Mehool Bhuva, the Director of the company considering the same as excessive to the extent of ₹ 30.00 lacs and therefore required to be disallowed u/ .....

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u/s.143(3) of the Income Tax Act,1961 (hereinafter referred to as the Act ) was framed vide order dated 28/03/2003. While framing the assessment, the Assessing Officer (AO in short) made various disallowances of ₹ 1,60,631/- on account of unpaid sales-tax liability, disallowance of ₹ 2,39,382/- on account of difference earned on realization of foreign currency of export sales, addition of ₹ 16,94,333/- on account of non-crediting of interest accrued on FDR, disallowance of  .....

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ssessee preferred an appeal before the ld.CIT(A). The ld.CIT(A) after considering the submissions of the assessee, dismissed the appeal. Being aggrieved by the order of the ld.CIT(A), assessee is now in appeal before us. 4. Ground No.1 is against disallowance of ₹ 5,000/- made on account of provisions of section 40A(3) of the Act. During the course of hearing, the ld.counsel for the assessee submitted that he does not wish to press the ground being smallness of the amount involved. However .....

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fied in making the addition. It is submitted by the ld.counsel for the assessee that the confirmation letter of Narendra Holing Pvt.Ltd. who had raised money on behalf of the assessee is given. He drew our attention towards letter of confirmation of Narendra Holding Pvt.Ltd. dated 26/03/2003, wherein it is confirmed that the amount of ₹ 64 lacs was paid to the 3rd parties on behalf of the assessee against calls in arrears and share premium. The ld.counsel for the assessee placed reliance o .....

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were made. Under these facts, the authorities below were justified in making the addition. 6. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. The assessee has claimed the expenditure on account of calls in arrears and share premium. The contention of the assessee is that by providing the confirmations of M/s.Narendra Holding Pvt.Ltd., the initial onus has been discharged by the assessee and the AO has not brought .....

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on record suggesting that those payments were made to 3rd parties on account of calls in arrears and share premium as there is no mention of the names, addresses, etc. of the parties to whom the assessee was liable to pay calls in arrears and share premium. In the absence of such material evidences which were required to be placed on record by the assessee in support of its claim of expenditure, we do not see any reason to interfere with the orders of the authorities below, the same are hereby .....

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the ld.CIT(A). He submitted that the Hon ble High Court of Gujarat in Tax Appeal No.1071 of 2013, order dated 28th Januaray-2014 has affirmed the order of the Tribunal. Under these facts, he submitted that the disallowances deserves to be deleted. 7.1. On the contrary, the ld.Sr.DR submitted that every assessment year is an independent year. He submitted that the expenditure is claimed by the assessee on account of the remuneration paid to its Director. The assessee was required to demonstrate .....

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n the event where assessee incurs any expenditure in respect of which payment has been paid or is to be made to any person referred to in clause (b) of section 40A(2) and the Assessing Officer is of the opinion that such expenditure is excessive or unreasonable having regard to the fair market value of the goods, services or facilities for which the payment is made or the legitimate needs of the business or profession of the assessee or the benefit derived by or accruing to him therefrom, so muc .....

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. The AO was of the opinion that mere holding of qualification does not lead to inference that he has indeed rendered any services. There is no dispute with regard to the fact that the issue in question is identical as was raised in the AY 1997-98. The Tribunal in ITA No.721/Ahd/2001 for AY 1997-98, in assessee s own case, vide it order dated 17/05/2013, in para-47 has observed as under:- 47. We have heard the rival submissions and perused the material on record. CIT(A) while deleting the additi .....

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rfere with his order. Thus, this ground of Revenue is dismissed. 7.3. The Revenue has not placed any material on record suggesting that there is change into the facts and circumstances in the present year. Therefore, taking a consistent view, we hereby direct the AO to delete the disallowance. Thus, this ground of assessee s appeal is allowed. 8. In the result, assessee s appeal is partly allowed. 9. Now, we take up the Assessee s appeal in ITA No.1407/Ahd/2007 for AY 2000-01. The Assessee has r .....

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ade by the AO u/s.36(i)(va) of the Act. 3. The learned Commissioner of Income Tax (Appeals) has erred in fact and in law in confirming the action of the Assessing Officer in disallowing the employer s contribution towards PF/ESIC of ₹ 16,02,019/- u/s.43B of the Act. 4. The learned Commissioner of Income Tax (Appeals) has erred in fact and in law in confirming the action of the Assessing Officer in charging interest u/s.234D of the Act. 5. The learned Commissioner of Income Tax (Appeals) er .....

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(va) of the Act and also made addition on account of disallowance of employer s contribution towards PF/ESIC of ₹ 16,02,019/- u/s.43B of the Act. Against the said assessment order, assessee preferred an appeal before the ld.CIT(A), who after considering the submissions dismissed the appeal. Aggrieved by the order of the ld.CIT(A), assessee is now in appeal before us. 11. Ground No.1 is against validity of the reopening of the assessment u/s.147 of the Act. The ld.counsel for the assessee s .....

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. Therefore, we see no reason to interfere on this issue and assessee s this ground of appeal is rejected. 13. Ground No.2 is against disallowance of employees contribution towards PF/ESIC. The ld.counsel for the assessee submitted that this issue has been decided against the assessee by the judgement of Hon ble High Court of Gujarat rendered in the case CIT vs. Gujarat State Road Transport Corporation reported at (2014) 366 ITR 170(Guj)::(2014) 41 Taxmann.com 100 (Guj.). However, the Hon ble Hi .....

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of the Revenue. He submitted that the judgement of the Hon ble Jurisdictional High Court would be binding precedent. 14. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. There is no dispute with regard to the fact that the Hon ble Jurisdictional High Court in the case of CIT vs. Gujarat State Road Transport Corporation reported at (2014) 366 ITR 170(Guj.)::(2014) 41 Taxmann.com 100 (Guj.) has decided this issue in .....

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of the assessee that in case the employees contribution is made before the due date of filing of return, no disallowance is called for. 15.1. On the contrary, ld.Sr.DR supported the order of the AO. 16. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. We find that the disallowance is made on the basis that the PF/ESIC contribution was not deposited even before the due date of payment but contention of the assesse .....

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. The Assessee has raised the following grounds of appeal:- 1.1. The order passed u/s.250 on 16.7.2012 for AY 2006-07 by CIT(A)- V, Baroda upholding the disallowance of ₹ 23,14,032 is wholly illegal, unlawful and against the principles of natural justice. 2.1. The Ld.CIT(A) has grievously erred in law and on facts in confirming the disallowance of sundry balances of ₹ 23,14,032 in respect of 8 parties written off by the appellant as irrecoverable and business loss. 2.2. That in the f .....

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utiny assessment and the assessment u/s.143(3) of the Income Tax Act,1961 (hereinafter referred to as the Act ) was framed vide order dated 05/12/2008. While framing the assessment, the Assessing Officer made disallowance of ₹ 1,07,700/- on account of excess rent paid u/s.40A(2)(b) of the Act. The AO also made disallowance a sum of ₹ 63,399/- on account of club expenditure, addition of ₹ 4,055/- on account of unutilized Modvat credit. Further, the AO made disallowance of ₹ .....

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sent appeal. 21. The ld.counsel for the assessee reiterated the submissions as were made before the ld.CIT(A). The ld.counsel for the assessee submitted that the appellant had debited the amount in the AY 2006-07 in the Profit & Loss account as sundry balances written off. The amount is debited into Profit & Loss account as per provisions of section 37(1) of the Act. The appellant is eligible to get the deduction in the year under consideration. The ld.counsel for the assessee submitted .....

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377; 10,50,000/- is written off. The assessee-company has also approached to IRBI regarding refund of such amount through legal notice of its advocate and RBI. However, IRBI has rejected the refund of such charges of ₹ 10,50,000/-. Copies of such letter of communication are enclosed by the assessee in the paper-book. Commitment charges payable by a party on the unused portion for the loan which has not been drawn, has to be taken as an expenditure laid out wholly and exclusively for the pu .....

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paid security deposit of ₹ 4,50,000/- against committed supply of Hydrogen gas. As on 01.04.2002 total outstanding with GSFC was ₹ 1,05,16,746/-. Due to financial difficulty of the assessee-company, GSFC has accepted one time settlement of payment of ₹ 75,97,500/- against old outstanding, which shall be payable in 15 equal monthly installment. Copy of such communication is enclosed at paper-book. Since GSFC has accepted one time settlement scheme, the assesseecompany has writte .....

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the company. Through oversight instead of legal & professional head company has debited in sundry balance written off account. Hence, such expenditure of ₹ 27,000/- is also allowable as business expenditure u/s.37(1) of the Act. For a sum of ₹ 10,000/- regarding other deposit Modi Xerox, the ld.counsel for the assessee submitted that the assessee-company had made contract with Modi Xerox Ltd. for taking photocopy of their machine. For this company has given deposit of ₹ 10 .....

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ince the amount is not fully recoverable the balance amount is written off. For a sum of ₹ 5,00,000/- regarding Six Steel Pvt.Ltd., the ld.counsel for the assessee submitted that the assesseecompany has paid advance to Six Steel Pvt.Ltd. for purchase of spareparts. However, since further amounts could not be paid and hence the balance amount of ₹ 5,00,000/- is written off. For a sum of ₹ 50,000/- regarding Prakalp Builder, the ld.counsel for the assessee submitted that the asse .....

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e balance amount of ₹ 10,978/- is written off. The ld.counsel for the assessee submitted that in view of the above, assessee requests to allow the sundry balance written off of ₹ 23,14,032/- u/s.37(1) of the Act. 22. On the contrary, the ld.Sr.DR supported the orders of the authorities below. 23. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. So far the expenditure are concerned, the same are related .....

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laim of bad debts. There has to be a prima facie case that the debt has become bad. It was discussed with the authorized representative that in the absence of details and documentary evidences which were required to establish the veracity of the circumstances by which the debts have purportedly become bad, it was not possible for revenue to accept the statement of the assessee merely on fact value. It has been held by Hon ble Gujarat High Court in the case of Dhall Enterprises and Engineers P Lt .....

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